Hollywood's mega-merger battle ends with Warner Bros. as the real winner
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In repeatedly rebuffing takeover offers from Paramount Skydance, Warner Bros. Discovery's board managed to create one of Hollywood's most dramatic and lucrative bidding wars, ultimately elevating the company's stock price and leading to a $31-a-share deal with Paramount.
Why it matters: If the deal ultimately gets approved by regulators and goes through, Warner Bros. Discovery CEO David Zaslav will have cemented his legacy as one of the savviest media dealmakers of all time.
- It wasn't long ago that Zaslav, one of Hollywood's highest-paid executives, was facing grim prospects as his company struggled to convince Wall Street that its streaming strategy could compete with behemoths like Netflix, Walt Disney and Amazon Prime Video.
State of play: Netflix said Thursday that it won't raise its bid for Warner Bros. Discovery's streaming and studio assets, allowing Paramount Skydance to emerge as the winning bidder of the entire Warner Bros. portfolio, which includes cable networks like CNN, TBS, TNT, HGTV and others.
- The statement came shortly after the Warner Bros. Discovery board announced that Paramount's revised bid of $31 per share was superior to its deal with Netflix.
- The board had repeatedly rebuffed offers from Paramount for months, ultimately getting Paramount to raise its bid by 63% from its original offer of $19 in September.
- It also got Paramount to make a number of concessions along the way that it believed would help sell the deal to regulators and ensure a clean closing.
Zoom out: For months, Paramount executives tried to argue that Netflix's bid would face higher regulatory scrutiny than its own offer. Netflix argued its deal would be good for consumers. Executives from both companies tried to court regulators in Washington.
- Paramount CEO David Ellison attended Trump's State of the Union address Tuesday as a guest.
- Netflix co-CEO Ted Sarandos visited the White House Thursday ahead of Netflix's announcement.
Reality check: Both deals would have faced regulatory scrutiny in the U.S. and abroad.
- The merger fight ultimately came down to who was willing to pay the highest price.
The bottom line: Everyone wins a little with the deal battle over, but Warner Bros. Discovery — which added $23 billion in market value in just five months — has the clearest evidence to show for it right now.
- Netflix is walking away from an expensive bidding war, and in doing so, conveniently leaves one competitor saddled with debt and two competitors burdened by a long, distracting regulatory approval process.
- Still, if Paramount's deal is approved and closes, Ellison becomes one of the most powerful figures in media, owning not just three major movie studios, but also two global streamers in Paramount+ and HBO Max, two major news networks in CNN and CBS, and a slew of cable networks.
